CFL News
March 15, 2012

AFL-CIO equity index fund reaches $1 billion

An index fund started by the AFL-CIO designed to achieve strong financial returns, spur job creation and support shareholder activism, has received $1.4 billion in commitments from union pension funds

At the AFL-CIO Winter Meetings this week, AFL-CIO President Richard Trumka announced that $1.4 billion has been committed in the AFL-CIO Equity Index Fund.  The AFL-CIO Investment Trust Corporation (ITC) would like to join President Trumka in personally thanking the 32 union pension funds who have invested in and committed to the Equity Index Fund.

"The AFL-CIO Equity Index Fund represents a powerful opportunity for qualified pension plans to reduce investment costs, while promoting good corporate governance through proxy voting and shareholder activism at the same time," says President Trumka.

The Equity Index Fund is a collective investment fund available to qualified pension plans.  Launched one year ago in March 2011, the Fund tracks the returns of the broad U.S. large-cap equity market, as represented by the S&P 500 Index. 

The Equity Index Fund offers a number of key benefits to union pension investors.  Because stocks in the fund's portfolio are not actively traded, investment management fees are low:  $150 per each million dollars invested (1.5 basis points).  In addition, the Equity Index Fund provides investors with daily liquidity while offering broad diversification of equity ownership in each of the S&P 500 Index companies. 

"The AFL-CIO Equity Index Fund delivers the return of the S&P 500 with certainty and at the lowest fee in the industry.  That is a combination that is hard to beat," says President Geoconda Arguello-Kline of the Southern Nevada Culinary Workers.

What differentiates the AFL-CIO Equity Index Fund from many other investment vehicles is its promotion of good corporate governance.  This is accomplished through its proxy voting, which is done in accordance with AFL-CIO guidelines and allows for investors to exercise their ownership rights by supporting important shareholder initiatives on corporate accountability, employee relations, and executive compensation.

Union investors anticipate increased shareholder activism.  "The $1 billion milestone for the AFL-CIO Equity Index Fund demonstrates tremendous progress toward making workers' capital work to the advantage of workers," says John Wilhelm, President of UNITE HERE. 

Frank Hurt, President of the Bakery Workers Union (BCTGM) realizes the potential of union investment.  "There is a significant benefit in having the proxies voted in a manner that is consistent with AFL-CIO guidelines and reflects the interests of plan participants," says President Hurt.

This sentiment is echoed by L. Todd Diorio, Business Manager of Laborers' Local 17.  "Laborers' Local 17 is a strong proponent of strategic industrial investments.  Our investment in the AFL-CIO Equity Index Fund is focused on initiating campaigns which aim to change employers' anti-union, anti-worker behavior and contribute to our bargaining power."

The AFL-CIO Equity Index Fund is managed by ASB Capital Management, a registered investment advisor that has handled Taft-Hartley and Public pension fund investments for more than 28 years.  ASB Capital Management currently manages more than $6.5 billion in S&P 500 Index mandates for Taft-Hartley and other labor-affiliated investors.

The AFL-CIO Equity Index is one of several innovative pension investment opportunities supported by the ITC. The AFL-CIO Family of Funds also includes the AFL-CIO Building Investment Trust, which provides competitive risk-adjusted returns through nationwide investments in institutional-quality commercial real estate, while promoting economic development and creating union jobs; and the AFL-CIO Housing Investment Trust, a mutual fund with a similar objective. 

These investment vehicles are on the cutting edge of a new trend for direct investment of pension funds in the industries of the workers who contribute to them - leading to a triple bottom line: financial returns, job creation, and shareholder activism.

If you are interested in participating or would like more information on the fund, please call Randy Kinder directly at (202)-898-9190.  Please feel free to visit us on the web at www.aflcio-indexfund.com.

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